Hedge Funds Aren’t Crazy About Great Western Bancorp Inc (GWB) Anymore

The 700+ hedge funds and money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund positions. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Great Western Bancorp Inc (NYSE:GWB) .

Great Western Bancorp Inc (NYSE:GWB) was in 11 hedge funds’ portfolios at the end of September. GWB shareholders have witnessed a decrease in hedge fund sentiment lately. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as TerraForm Power Inc (NASDAQ:TERP), Badger Meter, Inc. (NYSE:BMI), and New Relic Inc (NYSE:NEWR) to gather more data points.

We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.

Now, we’re going to take a glance at the key action regarding Great Western Bancorp Inc (NYSE:GWB).

What have hedge funds been doing with Great Western Bancorp Inc (NYSE:GWB)?

Heading into the fourth quarter of 2016, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 8% from the second quarter of 2016. On the other hand, there were a total of 21 hedge funds with a bullish position in GWB at the beginning of this year. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, D E Shaw, one of the biggest hedge funds in the world, holds the most valuable position in Great Western Bancorp Inc (NYSE:GWB). D E Shaw has a $13.9 million position in the stock, comprising less than 0.1% of its 13F portfolio. On D E Shaw’s heels is Paul Magidson, Jonathan Cohen. And Ostrom Enders of Castine Capital Management, with a $7.5 million position; 3.7% of its 13F portfolio is allocated to the company. Some other peers that are bullish include Cliff Asness’s AQR Capital Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and John Overdeck and David Siegel’s Two Sigma Advisors. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Seeing as Great Western Bancorp Inc (NYSE:GWB) has faced a declining sentiment from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of funds that slashed their entire stakes in the third quarter. It’s worth mentioning that Ken Griffin’s Citadel Investment Group cashed in the biggest position of all the investors monitored by Insider Monkey, valued at about $2.5 million in stock, and Matthew Tewksbury’s Stevens Capital Management was right behind this move, as the fund said goodbye to about $0.7 million worth of shares.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Great Western Bancorp Inc (NYSE:GWB) but similarly valued. We will take a look at TerraForm Power Inc (NASDAQ:TERP), Badger Meter, Inc. (NYSE:BMI), New Relic Inc (NYSE:NEWR), and Matthews International Corp (NASDAQ:MATW). All of these stocks’ market caps match GWB’s market cap.

As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $182 million. That figure was $44 million in GWB’s case. TerraForm Power Inc (NASDAQ:TERP) is the most popular stock in this table. On the other hand Matthews International Corp (NASDAQ:MATW) is the least popular one with only 10 bullish hedge fund positions. Great Western Bancorp Inc (NYSE:GWB) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard TERP might be a better candidate to consider taking a long position in.

Disclosure: None